Rodes v. Shannon

• Decision Date: 02 December 1963
• Citation: 35 Cal.Rptr. 339,222 Cal.App.2d 721
• Parties: Nicholas RODES, Plaintiff and Appellant, v. Irene SHANNON, also known as Irene Mack, Defendant and Respondent. Civ. 27281.
• Court: California Court of Appeals Court of Appeals

Page 339

35 Cal.Rptr. 339

222 Cal.App.2d 721

Nicholas RODES, Plaintiff and Appellant, v. Irene SHANNON, also known as Irene Mack, Defendant and Respondent.

Civ. 27281.

District Court of Appeal, Second District, Division 1, California.

Dec. 2, 1963.

Fainer & Steele and Jerrell Babb, Los Angeles, for appellant.

Rager & Olio, Fontana, for respondent.

FOURT, Justice.

This is an appeal by the plaintiff from a judgment which decreed among other things that he should not be entitled to damages or specific performance of a contract with reference to the purchase of certain real property.

A resume of some of the facts is as follows:

Plaintiff, a licensed real estate broker, maintained an office in the Lancaster area where he conducted his business. He had been in the area for many years and was familiar and acquainted with properties in the vicinity which were being purchased and sold. The defendant owned a parcel of real property which was located in the Lancaster-Antelop Valley area. Prior to March 6, 1958, the defendant had listed her property (consisting to approximately 6 acres) with the plaintiff for sale at a price of $6,500. It may be assumed that the plaintiff made at least some effort to sell the defendant's property at the price quoted. By reason of a favor which had been performed by the defendant for the plaintiff previously, plaintiff had indicated tht he would not charge her the usual real estate broker's commission if he sold her property. Plaintiff later in talking with the defendant told her it would be better for her to sell her property for $2,500 and to get rid of it. He indicated to her that she could get $2,500 for the property and finally after some considerable persuation she consented to sell the real property for such a figure. The so-called purchaser obtained by the plaintiff was Blanche Nelson, an employee in his office. In fact Blanche Nelson had no intention of purchasing the property but was acting solely for the plaintiff, her employer. An escrow was entered into at the Bank of America, Lancaster Branch, between defendant and Blanche Nelson on March 6, 1958, for the sale of the property for the sum of $2,500. Blanche Nelson, shortly after the escrow was opened, assigned her interest in the same to the plaintiff. While the escrow above mentioned was pending, plaintiff entered into another escrow to sell the same real property to persons by the name of Diaz for the sum of $6,500. There was no change in the character of the property from March 6, 1958, to April 1, 1958, and there were no changes of any importance within the area in which the property was located. The second escrow (between plaintiff and the Diazes) had a provision therein to the effect that the sale was contingent upon the sale between defendant and Blanche Nelson being concluded.

It must be admitted that Rodes was in fact the principal in both transactions. The complaint charged that the defendant had entered into a written contract whereby she had agreed to sell the property for the sum mentioned ($2,500), that he had done everything which was legally required of him under the contract, that by the terms of the contract he was entitled to the possession of the real property on or before April 6, 1958, but that defendant refused to perform, that he was a real estate broker which she knew, that he had acquired the claim sued upon and the real property for the purposes of resale and that he had a purchaser ready, willing and able to purchase the same on or before April 6, 1958, at a profit to plaintiff and he asked for damages and specific performance.

The answer in effect generally denied the allegations of the amended complaint. In the joint pre-trial conference memorandum the plaintiff sets forth among other things under the heading of 'contentions of the plaintiff' that 'the plaintiff * * * contends that defendant knew that he had a buyer for the said property and was opening an escrow concurrently with the escrow in which she was interested, for the purpose of effectuating the resale.' This would seem to indicate without question that the plaintiff knew at the time of his dealing with the defendant that he intended to and was at that time 'effectuating the resale' of the property in question.

Among the contentions of the defendant as set forth in a 'joint pre-trial statement' were the following 'that the sales price was $2500.00; that plaintiff told defendant the fair value of the property was $2500.00; that defendant relied on said statement; that at said time the fair value of said property was $7500,00; that at said time Blanche Nelson was an undisclosed dummy acting for plaintiff; that plaintiff had a secret sale pending to sell said property for approximately $6500.00; that defendant ascertained the true value of said property after opening the escrow and then immediately cancelled the escrow; and that the escrow was not completed within the prescribed time and was properly cancelled by defendant.'

The trial court made findings two of which are set forth in the footnote hereto. ¹ Thereafter a judgment was awarded to the defendant that plaintiff take nothing by his amended complaint.

Appellant now argues that the court erroneously made findings with reference to the matter of the breach of the fiduciary relationship between himself and the defendant because, as he now asserts, such activity on his part was not at issue.

We think that the pre-trial order clearly puts in issue the very matter about which plaintiff now complains. A reading of the reporter's transcript demonstrates that there was ample testimony in the evidence from which the court could draw the necessary inferences and conclusions to find and determine as it did.

As to the value of the property the defendant owner testified that in her opinion the property was worth $6,500. Admittedly within 24 days after the plaintiff made his agreement with the defendant, through a dummy in his own office to purchase the property for the sum of $2,500, he made a resale of the property to the Diazes for $6,500.

Plaintiff was the agent of the defendant in the transaction. An agent is a fiduciary. His obligation of diligent and faithful service is the same as that imposed upon a trustee. (CC § 2322(3); Rest. Agency § 13--Kinert v. Wright (1947) 81 Cal.App.2d 919, 925, 186 P.2d 364 [secret profit]; Sands v. Eagle Oil & Ref. Co. (1948) 83 Cal.App.2d 312, 318, 188 P.2d 782 [secret profit]; Estate of Arbuckle (1950) 98 Cal.App.2d 562, 569, 220 P.2d 950, 23 A.L.R.2d 372 [destruction of principal's will entrusted to his care; held will destroyed by fraud (constructive) within the meaning of Prob. C. § 350]; Adams v. Herman (1951) 106 Cal.App.2d 92, 98, 234 P.2d 695; Store of Happiness v. Carmona & Allen (1957) 152 Cal.App.2d , 268, 312 P.2d 1104.) See sections 28, 29 and 30 of Witkin, Summary of California Law wherein it is stated in part:

' General Principles

'An agent has no right to obtain an interest adverse to his principal. He will therefore not be allowed to deal with the subject matter of the agency without a full disclosure of the facts. (See Rest., Agency §§ 387, 388, 390.) And if he makes any secret profits from his agency the principal can recover them. (Thomas v. Snyder (1931) 114 C[al].A[pp]. 397, 300 P. 117; Schwarting v. Artel (1940) 40 C[al].A[pp].2d 433, 105 P.2d 380; Thompson v. Stoakes (1941) 46 C[al].A[pp].2d 285, 115 P.2d 830; Anderson v. [Thacher] Thacker (1946) 76 C[al].A[pp].2d 50, 65, 172 P.2d 533, Savage v. Mayer (1949) 33 C[al].2d 548, 203 P.2d 9; Adams v. Herman (1951) 106 C[al].A[pp]. 2d 92, 98, 234 P.2d 695; Crogan v. Metz (1956) 47 C[al].2d 398, 404, 303 P.2d 1029; Sears, Roebuck & Co. v. Blade (1956) 139 C[al].A[pp].2d 580, 590, 294 P.2d 140; Store of Happiness v. Carmona & Allen (1957) 152 C[al].A[pp]. 2d , 268, 312 P.2d 1104; Rest., Agency § 388; 2 Stanf.L.Rev. 574; 1944 A.S. 620; 1956 A.S. 253; 13 A.L.R. 905; 71 A.L.R. 933; 126 A.L.R. 1357; see infra, § 29 et seq.) But if he acts in good faith, fully disclosing all material facts, he may enter into a valid transaction with his principal for an adequate consideration. (Helbing v. Helbing (1948) 89 C[al].A[pp].2d 224, 200 [222 Cal.App.2d 726] P.2d 560; Stevens v. Hutton (1945) 71 C[al].A[pp].2d 676, 163 P.2d 479.)

* * *

* * *

' Personal purchase by Purchasing Agent

'Under the general rule against self-dealing by a fiduciary, an agent authorized to purchase certain property for his principal cannot purchase it for himself instead. (See Sands v. Eagle Oil & Ref. Co. (1948) 83 C[al].A[pp]. 2d 312, 320, 188 P.2d 782; 1947 A.S. 609; 20 A.L.R2d 1140.)

* * *

* * *

' Personal Purchase by Selling Agent

'(1) General Rule. If an agent with authority to sell property buys it himself, the burden is upon him to show that the transaction was proper in all respects. The principal may avoid it if there is any unfairness, even though the price is not inadequate. (Williams v. Lockwood (1917) 175 C[al]. 598, 166 P. 587; Silver v. Logue (1932) 127 C[al].A[pp]. 565, 16 P.2d 183; Young v. The Young Holdings Corp. (1938) 27 C[al].A[pp].2d 129, 148, 80 P.2d 723, Cisco v. Van Lew (1943) 60 C[al].A[pp].2d 575, 584, 141 [P.] C.2d 433.)

'* * *.'

A gratuitous agent insofar as exercising good faith is concerned is to be held to the same obligation as any other agent. (McPhetridge v. Smith (1929) 101 Cal.App. 122, 281 P. 419; Ward v. Andrews (1919) 44 Cal.App. 390, 186 P. 605; Brand v. Mantor (1935) 6 Cal.App.2d 126, 44 P.2d 390; Webb v. Saunders (1949) 89 Cal.App.2d 732, 736, 201 P.2d 816 [utmost good faith required]; Ramey v. Myers (1952) 111 Cal.App.2d 679, 685, 245 P.2d 360 [liable for secret profits].)

Restatement, Agency, Section 390, states in part:

'One employed as agent violates no duty to the principal by acting for his own benefit if he makes a full disclosure of the facts to an acquiescent principal and takes no unfair advantage of him. Before dealing with the...